This study examines the Causal Relationship between Financial Liberalization and Agricultural
Sector Output in Nigeria (AOG). Ex-post facto research design was employed and the annual time
series data for various years were obtained from Central Bank of Nigeria (CBN) Statistical Bulletin.
Unit Root Test, Engle -Granger Co- integration Test, Error correction Model (ECM) Test and
Granger Causality Tests were employed in analyses. Prime Lending Rate, Deposit Rate, Exchange
Rate, Money Supply as percentage of Gross Domestic Product and Liquidity Ratio are used as
indicators of financial liberalization. Hence the study concluded that AOG leads financial
liberalization in Nigeria and therefore recommends encouragement of privately owned cottage and
micro firms that will be employing the skilled man power trained by the agricultural institutions and
also make use of the agricultural sector output produced by the agro-firms as their raw materials.